ECB Survey Signals Inflation Reacceleration Risk as Firms Lift Price and Cost Expectations

The ECB’s latest Survey on the Access to Finance of Enterprises (SAFE) points to a renewed build-up in price pressures, driven largely by the fallout from the Middle East conflict. Firms reported a marked increase in expectations for both selling prices and input costs over the next 12 months, highlighting a shift in the near-term inflation outlook.

Selling price expectations rose from 2.9% to 3.5%, while input costs—including energy—jumped more sharply from 3.6% to 5.8%. The increase reflects the direct impact of higher energy prices following the escalation in the Middle East, with firms passing through rising costs into pricing decisions. Notably, daily survey responses showed a clear shift after late February, with firms surveyed after the onset of the conflict reporting significantly higher expectations.

In contrast, wage dynamics appear more contained. Wage growth expectations edged down from 3.1% to 2.8%, suggesting that the current inflation impulse is being driven more by external cost shocks than domestic labor pressures.

Inflation expectations mirror this divergence between short-term pressure and longer-term stability. One-year ahead inflation expectations increased from 2.6% to 3.0%, accompanied by a wider dispersion in outlooks, reflecting heightened uncertainty. However, expectations for three- and five-year horizons held steady at 3.0%, indicating that longer-term inflation expectations remain anchored despite the recent shock.

That said, underlying risks are shifting. The share of firms expecting upside risks to five-year inflation rose from 56% to 65%, and the distribution of long-term expectations has widened.

Full ECB SAFE release here.